EU Parliament might just have condemned its crypto industry.
🔫 Earlier in March the EU crypto sector dodged the first regulatory bullet (PoW-based crypto ban was excluded from the MiCA law), but was caught up by the second.
Yesterday the ECON and LIBE Committees approved a new set of regulations targeting crypto transfers, and it is devastating.
Despite all the evidence showing how bad crypto is for illicit purposes, somehow the European deputies decided that every crypto transfer is potentially related to a crime, and obliged crypto service providers to collect the information on the source of the asset and its beneficiary for every crypto transfer, even if it’s worth no more than €1.
The infamous FATF travelling rule, which compels financial institutions to gather data on any money transfer above €1’000 was already quite laughable in tracing billion-dollar money laundering schemes. Cancelling that threshold altogether for crypto transfers shows an unjustifiable double standard and a total disregard for the crypto industry.
And that’s not all. Crypto service providers will have to collect data and “verify its accuracy” even on transfers involving non-custodial wallets and inform the authorities every time their clients receive a total of €1’000 from a non-custodial wallet.
European deputies did not precise how exactly they think this could be done, but with all these drastic measures approved, they can happily pat themselves on the backs for protecting Europe from the crypto menace they know so little about.
But what does their vote really mean?
💸Obliging exchanges to collect data and report every penny people send in crypto will not help with the global money laundering or terrorism financing, because these activities are already carried out quite efficiently by traditional banks and financial institutions, and measured not even in thousands, but in billions of euros and dollars: Danske Bank laundered €200Bn; CumEx files participants like Deutsche, Santander, BNP and others scammed the European tax system for €140Bn; UBS accused of casually helping their clients with tax evasion: only the American clients may account for $100Bn annually… and these are just some of the schemes that became exposed. How many didn’t ?
The only consequences of the new transfer rules for crypto will be a colossal increase in reporting workload of the crypto exchanges and most likely their refusal to send/receive transfers from non-custodial wallets. This, in turn, will incite more people to use decentralized or P2P exchanges or any other solution to bypass centralized exchanges. This may even turn out to be a good thing for people who care about privacy… but still a bad thing for the crypto industry in Europe.
The proposal is yet to be approved during the parliamentarians’ trilogue with the EU Council and the EU Commission. Will they sacrifice the industry of the future and their citizens’ right to privacy for the sake of appearances?